Is Greece at a turning point?*

PublishedMarch 1, 2014

by Ania Thiemann, OECD Directorate for financial and Enterprise Affairs

The Greek economy has become good headline material for newspapers in recent years, but for all the wrong reasons. Having experienced a boom following its hosting of the 2004 Olympic Games, the party ended in spectacular fashion when Greece failed to meet its debt obligations in 2010 and came close to leaving the euro.

Greece was rescued in extremis by the concerted efforts of the EU, the European Central Bank and the IMF (the so-called Troika). However, the first austerity package failed to turn Greece around, and the country has now experienced the longest and steepest recession anywhere in Europe in recent times, with real GDP contracting for the sixth consecutive year in 2013–by 3.8%, according to the OECD’s latest economic survey of Greece. The consequences for the Greek people have been dire. Salaries have fallen by over a quarter on average, though retail prices kept rising until early 2013. Pensions were reduced by nearly one-third, too, but prices of heating fuel skyrocketed because of tax increases. The unemployment rate now exceeds 26%, and more than half of those under 25 years old are out of a job. Little wonder the Greeks regularly take to the streets to protest against this daily reality.

Inevitably, with the austerity measures exacerbating the recession, the Greek authorities have struggled to raise income tax revenues or bring general government finances under control. But they have nonetheless pushed on with structural reform to redress the imbalances and put Greece on a more sustainable growth path. For the first time, the fiscal accounts are likely to post a primary surplus in 2014, according to the government’s forecast. In addition, among several specific measures, such as a project with the OECD to tackle red tape and reduce the administrative burden on businesses, in November 2012 the OECD and the Greek government signed an agreement whereby the OECD would screen the Greek economy for regulatory barriers to competition. Four sectors were chosen–food processing, retail trade, building materials and tourism–which accounted for 21% of GDP and 26% of employment in 2011 (most recent comparative data). The project was supported by the Hellenic Competition Commission.

Over an 11-month period, the OECD found a total of 555 restrictive provisions that could potentially lead to market distortions, and made 329 individual recommendations for amending or abolishing specific legal provisions.

These reforms are not to be taken lightly. Rather, the OECD estimates the total benefit to the Greek economy to be around €5.2 billion, or 2.5% of GDP, stemming from increased purchasing power for consumers and efficiency gains for companies. The measures would offer greater choice and variety for consumers, as well as provide incentives for firms to innovate and to operate more efficiently. If fully implemented, the recommendations to remove barriers to competition would have an even wider and deeper impact over time on productivity and job creation, as OECD studies show…

…Despite its uphill struggle in recent years, Greece may fi nally be reaching a turning point. Many economists (the OECD among them) forecast a return to positive, albeit modest, growth during the course of 2014 or 2015. The OECD expects the economy to fi rm up somewhat in the second half of 2014, leading to moderate growth of 1.8% in 2015. Businesses are starting to refl ect this confi dence. The forwardlooking purchasing managers index (PMI) reached its highest level in 51 months at the end of September. Even so, households remain nervous, and to restore strength, the Greek authorities need to pursue their reform programme and lock in the results already achieved. To this effect, the government must resist pressure from interest groups intent on protecting their own status quo rather than the well-being of the wider population, and carry on with the necessary reform to the benefit of everyone, including those who need it the most, such as young people and the unemployed.

Middle English parlai speech, probably from Middle French parlee, from Medieval Latin parabolare, from Late Latin parabola speech, parable

First Known Use: 1580*

“Parley” is a discussion or conference, especially one between enemies over terms of a truce or points in dispute or other matters; mutual discourse.

The root of the word parley is parler, which is the French verb “to speak”.

Beginning in the High Middle Ages with the expansion of monarchs, a parley, or “talk”, was a meeting held between kings and their Chief Retainers. Parleys were part of the many changes in Europe, especially regarding governments. These meetings can be attributed to the formation of parliaments, which are derived from a similar root, parliamentum, simply meaning “talking”.**

Act V Julius Caesar by William Shakespeare
Drum. Enter BRUTUS, CASSIUS, and their Army; LUCILIUS, TITINIUS, MESSALA, and others
BRUTUS: They stand, and would have parley.